Self-Prepared Tax Returns – What Makes the Most Sense to You?

January 16th, 2018 No comments

Self-Prepared Tax Returns

What Makes the Most Sense to You?

We were curious how much the average American household spends on income taxes. Looking at data released in August by the Bureau of Labor Statistics as reported by CNSNews.com, Americans on average spent more on taxes in 2016 than they did on food and clothing combined. It was also reported that in three years, from 2013 to 2016, the average tax bill for Americans increased 41.13%. The only expense category that exceeded the payment of income taxes was the cost of housing, which included the cost of the housing, property taxes, utilities, public services, household operations and supplies, and furnishings. It is quite apparent that income taxes are a major household expense.

Per the IRS, 51.763 million taxpayers self-prepared their returns for the 2016 tax year. The IRS statistics show that this number has been increasing annually.

Why are more Americans self-preparing their returns? Read more…

Share

PA Dept. of Revenue (DOR) Continues to Challenge Taxpayers Claiming Unreimbursed Employee Expenses

January 9th, 2018 No comments

The PA DOR believes that an employer seldom requires an employee to incur expenses on behalf of the employer that it is not willing to reimburse the employee. Accordingly, the requirements to claim unreimbursed employee expenses on PA Form UE-1 are very stringent. Learn how to Read more…

Share
Categories: Pennsylvania Tax News Tags:

Flexible Spending Account (FSA) vs. Health Savings Account (HSA)

January 2nd, 2018 No comments

FSAs and HSAs allow taxpayers to make tax-free contributions to pay for out-of-pocket (co-pays and deductibles) medical expenses. The monies contributed to these plans are shielded from personal income and payroll taxes (social security & Medicare). However, the payroll tax exclusion does not apply to self-employed individuals.

What are some of the differences between these two plans? Read more…

Share

How to Lose Social Security Benefits

December 26th, 2017 No comments

If you are self-employed and procrastinate filing your personal income tax returns, you not only run the risk of losing a tax refund because your Form 1040 return was filed after the statute of limitations for claiming a refund had expired, but you will also lose social security credits which may impact your social security benefits.

The social security code (42 U.S.C. 405(c)(4)) says you have to report the SE income Read more…

Share

Crypto Currency and Taxes

December 19th, 2017 No comments

Remember the days when Swiss banks (as well as banks in other countries) refused to reveal their customers’ names? Some very wealthy Americans placed their assets in these foreign banks to hide them from the IRS to avoid paying income taxes. The IRS began serving “John Doe” warrants to foreign banks to compel those banks to release the names of account holders on certain bank accounts. This was followed by a tough crackdown by the IRS on taxpayers who failed to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR), which certain foreign bank account holders are required to file (and face stiff penalties for not filing, including jail time).

You may not have heard of crypto currency. However, you likely have heard of Bitcoin which is a form of crypto currency. The use of crypto currency has definitely caught the attention of the IRS just like foreign banks did many years ago. Why is the IRS interested in crypto currency? Read more…

Share

Tax Rule Changes Regarding Sale of Stock

December 12th, 2017 No comments

Tax Rule Changes Regarding Sale of Stock

New Rule Becomes Effective January 1, 2018

Effective January 1, 2018, assuming that the proposed tax law changes go into effect, taxpayers will no longer be able to choose which lot of stock they own is sold. This choosing of the lot that was being sold was referred to as specific identification.  Taxpayers could choose which lot of stock was sold (usually the one(s) with the highest tax basis (cost), to minimize the gain on the sale of stock or to generate the largest capital loss to offset capital gains from other sales. Effective January 1, 2018, taxpayers Read more…

Share

$10,000 Self-Prepared Form 1040 Error

December 6th, 2017 No comments

A new client recently walked into our office. He had been self-preparing his personal tax returns for quite a few years using TurboTax and received an audit inquiry from the IRS. He did what many taxpayers do, he ignored the letter. The IRS got his attention Read more…

Share

Required Minimum Distributions (RMDs) – The Basics

November 28th, 2017 No comments

Once age 70 ½ is reached, you need to take your first required minimum distribution (RMD) from your IRA accounts. You turned 70 ½ in 2017 if you were born between July 1, 1946 and June 30, 1947. You always use the age you are on the last day of the year.

Generally, you need to take your RMDs by December 31st of the year for which it is due. But for your first RMD, you can defer the distribution to April 1st of the following year. Isn’t it always best to defer income if you can? If you decide to defer that first RMD from 2017 to 2018, you need to realize that you will end up with two RMDs in 2018 (the 2017 & 2018 RMDs). Generally for many taxpayers, the bunching of income is not a good thing.

Who is responsible for computing and remitting the RMD? Many taxpayers mistakenly think Read more…

Share

US Treasury Bond Planning

November 21st, 2017 No comments

You find yourself in a position where you or an elder parent has U.S. Treasury Bonds as part of an investment portfolio and you are wondering if the bonds should be redeemed.

You are concerned because the interest earned on those bonds would be taxable income and would affect the individual’s income tax bracket, outflow of cash to pay the taxes, and could possibly affect the financial statements presented to an Assisted Living or a Continuing Care Retirement Community.

You are asking yourself what is the most effective plan to implement. While this blog will consider some of the more pertinent tax issues, a senior care attorney should always be consulted in these situations.

Let’s first look at the rules regarding the reporting of the interest earned on those bonds. Read more…

Share

IRS To Allow Truncated SSNs

November 14th, 2017 No comments

In an effort to reduce identity theft, the IRS issued proposed regulations that would permit employers to use truncated taxpayer identification numbers (TTINs) on Forms W-2, Wage and Tax Statement, issued to employees. Permissible TTINs are Social Security numbers (SSNs) with the first five digits of the nine-digit number replaced with asterisks or XXXs in the following formats: ***-**-1234 or XXX-XX-1234.

Although this change was effective on the date of enactment, December 18, 2015, the IRS is delaying the effective date of the proposed regulations until Read more…

Share
Visit Us On TwitterVisit Us On FacebookVisit Us On LinkedinCheck Our Feed